11 Micro-Cap Stocks Undervalued Relative To Cash Flow


One interesting way to search for potentially undervalued opportunities is with the ratio levered free cash flow/enterprise value - stocks with high ratios may be undervalued relative to their cash flows.

Levered free cash flow is the free cash flow after deducting interest payments on outstanding debt. Enterprise value is the sum of the firm’s value from all ownership sources: market cap, outstanding debt, and preferred shares. From this value we subtract cash holdings because, in the event of a takeover, that cash would be used towards the takeover price.

We ran a screen on micro-cap stocks with market caps just over $100 million for those with high ratios of levered free cash flow/enterprise value.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.


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